Australia’s government plans to scrap the country’s 100-Member Rule, which allows 100 shareholders to force a general shareholders’ meeting outside of the normal schedule to consider a resolution.
In what it calls a drive to eliminate red tape, the government tabled a bill on October 22 that would void the 100-Member Rule. A separate rule that would force companies to hold extraordinary meetings at the insistence of 5 percent or more of voting shares would remain in place, however.
The Business Council of Australia, which supports the government’s move, says the existing law gives too much power to small groups of shareholders and can create a costly burden for companies listed in Australia.
‘The holding of an extraordinary general meeting can cost major companies, and thus their shareholders, up to A$1 mn ($878,000),’ the council says in a submission about the law. ‘The current low threshold of shareholders required to call a meeting (less than 0.05 percent of shareholders for many major companies), allows one group of shareholders to impose these additional costs on all other shareholders of a company.’
But the Australian Shareholders’ Association (ASA) says the law has been used only four times in the last 30 years to call extraordinary shareholder meetings and 11 times to add resolutions to regular shareholder meetings. Scrapping the rule, the association says, would diminish the rights of small shareholders and entrench the existing power structure.
The ASA says it will not protest the elimination of the 100-Member Rule if the government amends another rule to allow groups of as few as 10 shareholders to force consideration of resolutions at regular meetings. ‘The government should empower Australia’s 7 mn retail investors by requiring only 10 signatures for AGM shareholder resolutions under [section] 249N [of the Corporations Act]. This is the best way to energize lifeless AGMs and – given with adequate notice – it would incur little extra cost for listed companies,’ the association says.
